Life insurance offers vital protection, but many don’t understand it

Time and again, polls from within the life insurance industry highlight a real disconnect between the value the coverage they offer provides, and what people think about it. To that end, it's important for companies to be more proactive in educating potential policyholders about what life insurance can do for them, and – to address another common sticking point for consumers – what they can expect to pay for it.

One of the biggest disconnects that's often observed in the life insurance sector is that the vast majority of people understand that it's important to have, but far fewer believe they personally need it, according to New York Newsday. Coupling that issue with the fact that there are many misconceptions about what a good plan can cost, it should come as no surprise to anyone within the life insurance industry that more than 2 in every 5 adults have no such coverage.

The right life insurance can help any family at various points in their lives.

What's the issue?
Consumers often go without life insurance simply because they feel they don't really need it, can't afford it, or sometimes both, the report said. However, experts caution that in a lot of cases, that's often because they don't understand their coverage needs and what they can actually fit into their budgets. When people get married, buy homes, have kids, and so on, their life insurance needs change significantly, and that's also true of less significant life events like changing jobs or even getting a raise. Knowing what impacts how much life insurance is needed is a crucial first step to understanding full coverage needs.

The good news is that the life insurance industry is adjusting to the ways people think of these policies today, and are offering a broader range of options that may help fit into any household budget, according to Binghamton Homepage. Often, consumers believe the only life insurance options available are something like universal coverage, which can be quite expensive and lasts for their entire lives. But in reality, there are now policies that expire after a certain number of years, or can be used to build savings over time.

“Those are two things, for example, that have made life insurance more interesting, and are driving sales and better connecting these folks who think life insurance is a good idea, and yet they don't go forward to buy life insurance,” George Kozol, senior vice president of marketing at a Binghamton-based life insurer, told the site.

Assessing the situation
Once people have a firm understanding of their life insurance needs and what that coverage should cost, it's also wise to consistently revisit the issue, according to the Cobb Business Journal. Again, whenever there's a life event that changes their financial horizons, looking at what that means for life insurance needs is a good idea, and it can actually be quite easy to add more coverage that still fits within that household budget.

This all serves to highlight why insurers and brokers may simply need to do a little more outreach all year long, to make sure people understand what coverage entails and how it can protect their loved ones whenever the need arises.